Wall Street Embracing Shari'a-Compliant Finance

As an important monograph on Sharia-Compliant Finance (SCF) recently issued by the McCormick Foundation (for copies contact the Center at www.SecureFreedom.org) makes clear, the investors running the SCF are, unsurprisingly, adherents to Shari'a. A number of them explicitly embrace its call to jihad (including a former senior member of the Dow Jones Islamic Index, Sheik Taqi Usmani). This "holy war" is to be waged where possible through violent means, where necessary through "soft" means like Shariah-Compliant Finance. For this reason, such Jihadis call SCF "financial jihad."

Earlier this year, David Yerushalmi, a litigator specializing in securities law and an expert on Shari'a, produced a legal memorandum (soon to appear in the University of Utah Law Review) examining the civil and criminal exposure inherent in Shari'a-Compliant Finance. His conclusion: banks and investment houses offering SCF products may be enabling or engaging in the following: racketeering, antitrust activity, securities fraud, consumer fraud and/or material support for terror.

What makes Shari'a-Compliant Finance dangerous is that in its effort to legitimize and institutionalize Shari'a in America, it is advancing a criminal conspiracy whose purpose is the violent overthrow of the United States Constitution and government in favor of Islamic rule. That would make it sedition.

Read the whole story: Wall Street, What's Next?

2 comments:

Citizen Warrior September 17, 2008 at 9:12 AM  

With Islamic banking attracting more and more investors, Deutsche Bank has launched a new set of mutual funds that are Shari'a-compliant. The market for such funds is growing quickly.

Deutsche Bank subsidiary DWS Investments has developed the Noor Islamic Fund line together with Islamic scholars to ensure that they complied with Shari'a law.

Read more: Deutsche Bank Concedes.

heroyalwhyness September 18, 2008 at 6:37 PM  

CW, may I suggest including a link to Timor Kuran's insight to sharia finance?

Hugh Fitzgerald commented on back in February:

From an article, or rather, a book-review and summary by Daniel Pipes of Professor Timur Kuran's indispensable study, "Islam and Mammon":

"Islamic economics increasingly has become force to contend with due to burgeoning portfolios of oil exporters and multiplying Islamic financial instruments (such as interest-free mortgages and sukuk bonds). But what does it all amount to? Can Shari'a-compliant instruments challenge the existing international financial order? Would an Islamic economic regime, as an enthusiast claims, really imply an end to injustice because of "the State's provision for the well-being of all people"?

To understand this system, the ideal place to start is "Islam and Mammon," a brilliant book by Timur Kuran, written when he was (ironically, given heavy Saudi backing for Islamic economics) King Faisal Professor of Islamic Thought and Culture at the University of Southern California.

Now teaching at Duke University, Kuran finds that Islamic economics does not go back to Muhammad but is an "invented tradition" that emerged in the 1940s in India. The notion of an economics discipline "that is distinctly and self-consciously Islamic is very new." Even the most learned Muslims a century ago would have been dumbfounded by the "Islamic economics."

The idea was primarily the brainchild of an Islamist intellectual, Abul-Ala Mawdudi (1903-79), for whom Islamic economics served as a mechanism to achieve many goals: to minimize relations with non-Muslims, strengthen the collective sense of Muslim identity, extend Islam into a new area of human activity, and modernize without Westernizing.

As an academic discipline, Islamic economics took off during the mid-1960s; it acquired institutional heft during the oil boom of the 1970s, when the Saudis and other Muslim oil exporters, for the first time possessing substantial sums of money, provided the project with "vast assistance."

Proponents of Islamic economics make two basic claims: that the prevailing capitalist order has failed and that Islam offers the remedy. To assess the latter assertion, Kuran devotes intense attention to understand the actual functioning of Islamic economics, focusing on its three main claims: that it has abolished interest on money, achieved economic equality, and established a superior business ethic. On all three counts, he finds it a total failure.

1) "Nowhere has interest been purged from economic transactions, and nowhere does economic Islamization enjoy mass support." Exotic and complex profit-loss sharing techniques such as ijara, mudaraba, murabaha, and musharaka all involve thinly disguised payments of interest. Banks claiming to be Islamic in fact "look more like other modern financial institutions than like anything in Islam's heritage." In brief, there is almost nothing Islamic about Islamic banking which goes far to explain how Citibank and other Western majors host far larger Islam-compliant deposits than do the specifically Islamic banks.

2) "Nowhere" has the goal of reducing inequality by imposition of the zakat tax succeeded. Indeed, Kuran finds this tax "does not necessarily transfer resources to the poor; it may transfer resources away from them." Worse, in Malaysia, zakat taxation, supposedly intended to help the poor, instead appears to serve as "a convenient pretext for advancing broad Islamic objectives and for lining the pockets of religious officials."

3) "The renewed emphasis on economic morality has had no appreciable effect on economic behavior." That's because, in common with socialism, "certain elements of the Islamic economic agenda conflict with human nature."

Kuran dismisses the whole concept of Islamic economics. "[T]here is no distinctly Islamic way to build a ship, or defend a territory, or cure an epidemic, or forecast the weather," so why money? He concludes that the significance of Islamic economics lies not in the economy but in identity and religion. The scheme "has promoted the spread of antimodern currents of thought all across the Islamic world. It has also fostered an environment conducive to Islamist militancy."

Indeed, Islamic economics possibly contributes to global economic instability by "hindering institutional social reforms necessary for healthy economic development." In particular, were Muslims truly forbidden not to pay or charge interest, they would be relegated "to the fringes of the international economy."

In short, Islamic economics has trivial economic import but poses a substantial and malign political danger."

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Setting Precedents

As Robert Spencer put it: "...it's a small accommodation in itself, but it reinforces the precedent that American practices must give way to Muslim ones whenever they clash. Once that precedent is set, it does indeed lead to the Islamization of American society, unless at a certain point non-Muslims are willing to draw the line and say 'Thus far, but no farther. No more accommodation of Muslim demands.' That line will never be drawn, however, as long as Americans continue to fail to see the larger implications and inevitable outcome of these individual incidents."

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